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California Proposal for Mile Tax to replace Gas Tax – Part 3 – Tax Use of Roads not Fuel Purchased

26 Jan

This is Part 3 of “Exploring a Road Usage Charge as an Alternative to the Gasoline Tax” released by CalSTA (California State Transportation Agency).

Explore a Tax Structure to Reflect Use of the System, Not Fuel Purchased

Implementation of a road usage charge to replace the antiquated per-gallon excise tax would help to preserve transportation revenues for state and local governments. However, as highlighted by the experience in Oregon, the process to implement a road usage charge is long and challenging. A demonstration program will provide data to inform the conversation regarding a road usage charge as a viable user fee option for California and test participant reactions to the concept. The state should pursue a demonstration program to understand the challenges and best practices associated with a road usage charge program.

A conversion from a gasoline excise tax to a road usage charge would be an extensive process that would take considerable time. Exploration of the issues discussed above would enable the state to explore an important option for transportation funding without necessitating a change to the current tax structure, or to current statute.

The list of areas that should be investigated is wide-ranging, but some of the most prominent include:

  • Privacy
  • Public Education
  • Rural and Urban perceptions
  • Environmental justice
  • Technological hurdles
  • Practicality
  • Equity
  • Interoperability

Other States are Exploring the Road Usage Charge

The state of Oregon has been a national leader in the drive towards a road usage charge. It is currently the only state in the nation that has a permanent, albeit limited, road usage charge. Oregon started on this path in 2001, when the Oregon Legislature created Oregon’s Road User Fee Task Force (Task Force). The Task Force was created to develop a revenue collection design funded through user pay methods, acceptable and visible to the public, that ensures a flow of revenue sufficient to annually maintain, preserve and improve Oregon’s state, county and city highway and road system.

The Task Force researched and investigated more than two-dozen revenue options. After the Task Force determined that a road user fee based on miles driven had the most promise, it spearheaded a successful pilot in the Portland area that concluded in 2007. That 2007 pilot proved the concept of a per-mile fee was feasible and pinpointed areas that needed more research and testing.

In 2012, the Oregon Department of Transportation (ODOT) began a second road user fee pilot. The second pilot included new technologies that could report VMT without the use of a global positioning system (GPS), assuaging many privacy concerns. Notably, the second pilot gave volunteers several options, including the type of device used, and a choice of service provider. The pilot concluded in February 2013, and was the final proof of concept necessary to move forward into formal implementation.

A 2013 bill (Senate Bill 810) authorized the ODOT to set up a permanent road usage charge system for 5,000 volunteer motorists beginning July 1, 2015. ODOT may assess a charge of 1.5 cents per mile for up to 5,000 volunteer cars and light commercial vehicles and issue a gas tax refund to those participants.

Washington and other western states are exploring a road usage charge and have formed the Western Road Usage Charge Consortium to collaborate and pool valuable research and development dollars.

The Benefit of Exploring the Road Usage Charge

The word “sustainability” generally evokes thoughts related environmental quality. But sustainability is a much broader concept that includes, at its heart, a consideration for the long-term feasibility of any undertaking, including its financial feasibility. As currently structured and with advances in vehicle technologies, the current per-gallon tax on fuel is not sustainable as a long-term revenue source for transportation infrastructure funding. Therefore, California should consider the feasibility of other revenue sources.

The road usage charge is untested on a large scale in the United States, but may offer benefits as an alternative to the gasoline tax in terms of greater revenue sustainability to maintain bridges, roads and other transportation infrastructure; and in terms of a closer nexus between the payer and the service being consumed. A closer nexus between a road usage charge and miles traveled on roads and highways may additionally improve traveler information about the relative costs of car travel compared to other modes. Better consumer information on the cost of car trips may increase car pools, transit, and active transportation modes; resulting in co-benefits to the environment and public health.

When the possible benefits of a road usage charge detailed in the prior paragraph are coupled with the need to consider various options for privacy protection, technology, and other detail of a road usage charge system, the merit of a demonstration program comes into focus. This whitepaper does not recommend implementation of a road usage charge – rather it recommends exploration, through a demonstration program, to better understand the possible benefits and costs. Through future efforts, the CTIP Workgroup will additionally be looking at other pay-as-you-go revenue options to maintain transportation infrastructure.